Cycles in the commodities market
Commodities have different price movements patterns. Yet trading be described in terms of bullish and bearish trend cycles, as in other financial markets.
The commodity market cycles trends caused by supply and demand on the market. Therefore, the is market fundamental forces that are significant, beside of certain political decisions.
Most countries base the value of their currency only against the value of currencies of other nations. Today, there is not a single product that serves as a comparison value such gold was before few decades.
Commodity trading in different cycles
It is not easy to describe the cycles in commodity trading since there are always exceptions to the rule in relation to whether a product is in the bullish or bearish
The commodity market is extremely complex
Take oil as an example, and how this may affect commodity prices in a number of other ingredients:
Oil prices often vary based on the amount of crude oil that is available, simply because so many other industries dependent on energy from oil. As an example, a steep decline in oil production leads to higher gasoline prices, which in turn affect the transport of agricultural products. This gives the artificial constraints of supply and demand, and can affect the overall commodity prices. Oil often have fluctuations in their offer, and many experienced commodity investors and traders predict certain seasonality and adapt to those subject to seasonal cycles in their investments. Such side effects are therefore somewhat predictable part of commodity trading.
As a rule, only major geopolitical events of significance will affect a commodity demand or supply. A natural disaster like an earthquake or tsunami, for example, lower production volumes in one place and thus boosting demand and production elsewhere, so that commodity prices may fall as well as rise simultaneously in two different parts of the world – while the total commodity prices will remain unchanged.
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